OYO raised $660 million in debt funding to repay past debts
OYOhas announced that it received commitments of close to $1 billion from leading investors.
- Fidelity, Citadel Capital Management and Varde Partners have reportedly participated in the round.
SoftBank’s Rajeev Misra has announced that OYO was nearing a breakeven point last year as its revenue and expenses dropped.
AdvertisementHotels and hospitality company OYO has raised $660 million in debt from undisclosed institutional investors as the Gurugram-based startup continues to grapple with the pandemic.
The funding has been raised through the Term Loan B (TLB) route, the firm said in a statement.
TBL is a term loan made by institutional investors whose primary goals are maximising the long-term total returns on their investments.
The company, in its press note, highlighted that its debt financing offer was oversubscribed by 1.7 times and it has received commitments of close to $1 billion from leading investors.
The company did not disclose the investors. However, an ET report citing sources has highlighted that Fidelity, Citadel Capital Management and Varde Partners have participated in the round.
JP Morgan, Deutsche Bank and Mizuho Securities have served as the lead arranger for this financing.
The financing will help OYO to repay past debts, strengthen balance sheets and boost the product technology. "Oyo is well capitalised and on the path of achieving profitability. Our two largest markets have demonstrated profitability at the slightest signs of industry recovery from the COVID-19 pandemic," the company’s chief financial officer Abhishek Gupta has said.
The year 2020 has been pretty bad for the entire hotel and hospitality industry, as the world stepped into a lockdown with COVID-cases on the rise. This year was expected to be somewhat better, but the destruction caused by the second wave of the pandemic made matters worse.
OYO’s founder Ritesh Agarwal had come on record in April 2020, confirming that the company recorded a 50 to 60% drop in OYO’s occupancy rate and revenues. However, chief executive of
Misra, during ET Global Business Summit held in September 2020, also noted that was nearing a breakeven point as its monthly expenses and revenue dropped down to around $30 million. The decline in OYO’s revenues have led to the salary cuts, furloughs and layoffs across all 80 countries it was operating in.
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